BY MAURICE WILLIAMS
A $57 billion imperialist-imposed "bailout" hasn't halted the financial nightmare facing south Korea's capitalist rulers. The country's currency lost 20 percent of its value in two days, with the won falling to a record low of 1,460 to the U.S. dollar on December 9. "Everybody's panicking," remarked one executive at a foreign brokerage firm in Seoul. "The won is going further down." Meanwhile the first large-scale layoffs under the austerity terms of the "bailout" are looming.

On December 8 the government in Seoul acknowledged that its short-term debt totaled more than $100 billion, not the $66 billion figure announced when negotiations began for the International Monetary Fund (IMF) financial arrangement. The Chosun Ilbo, a major newspaper in south Korea, reported the same day that the country's foreign currency reserves had fallen to only $5 billion during the first week of December, from about $30 billion in late October.

One finance ministry official said the Bank of Korea was slashing through its reserves by as much as $2 billion a day to aid south Korean banks struggling to pay off loans as foreign creditors demanded payment. Most of the regime's short-term debt is dominated in U.S. dollars, which means that with a devalued currency, loans become more expensive to repay. Foreign banks had previously shut off credit lines to south Korea, fearing defaults.

South Korea's economy, like those of other countries in the region, has been battered by currency devaluations that have precipitated a flurry of defaults on loan payments to imperialist banks. Searching for financial stability, Seoul reached an agreement with the IMF December 3 that includes an austerity program with demands for deep cuts in social programs and massive layoffs. The deal also allows the maximum foreign ownership of south Korean companies to be raised from 26 percent to 50 percent.

Tensions between the south Korean government and the Clinton administration have grown. Washington is pressing the regime to impose the IMF austerity package, while south Korean officials are seeking more financial commitments from their imperial masters. Tokyo had agreed to contribute $10 billion and Washington $5 billion to the IMF deal as a "backup source" of funds, available only if $35 billion from IMF, the World Bank, and the Asian Development Fund prove insufficient.

"If the U.S. and Japan are committed to supporting the Korean economy, they should support the economy at the early stage, rather than waiting," declared Lim Chang Yuel, the minister of finance. "If not, they are just servicing by words. They are advising on policies and not really putting their money in at all."

In response, U.S. treasury secretary Robert Rubin snapped, "They should implement the reforms that are needed to get Korea back on the right track."

Adding to Seoul's jitters, "already unions have threatened strikes if the Government complies with the I.M.F.'s conditions -which many in South Korea view, accurately, as American conditions," the December 10 New York Times reported.

As fears of new bankruptcies escalate, the Halla shipbuilding group collapsed December 6 after failing to repay $200 million in debt. It was the sixth of south Korea's 30 largest conglomerates to fail this year. The company had announced November 26 it was firing 3,000 workers in December, anticipating IMF "restructuring" conditions. Workers at Halla said they would resist the measures.

"Job losses may generate social tensions," declared the headline on a December 10 article in London's Financial Times. It reported that the labor ministry in south Korea estimated more than 900,000 people will lose their jobs in south Korea in 1998. Government officials in Thailand say some 1.5 million workers will be fired by the end of next year, and another 1 million people will be jobless in Indonesia as a result of the current economic crisis.

Tokyo ponders $77 billion `bailout'
On December 10 Japanese prime minister Ryutaro Hashimoto was scheduled to present an economic package that must "revive Japan's comatose economy that fell into recession in six months through Sept. 30," the December 15 Business Week reported. The plan involves using $77 billion of the country's public funds to shore up weak banks and other financial institutions.

According to Business Week, "Hashimoto's fate hangs on" the proposals. "It's a political minefield that could cost taxpayers $80 billion - and Hashimoto his job." The last time government officials attempted to use public funds to salvage failing financial institutions was 1996, in a scheme involving $6 billion to housing lenders that sparked demonstrations across the country.

Regulators in Japan have begun to assert that the amount of problem loans on banks books could be nearly $600 billion - three times the government's official figure and 14 percent of all outstanding loans. South Korea's financial woes have had the greatest impact on capitalist investors in Japan, who owned $24.3 billion of Korean bank debt last year.

Tokyo has hinted at selling some of the country's $391 billion worth of U.S. Treasury Bonds to "rescue" the weaker banks. Such a move was "one of the biggest potential threats to the U.S. financial system posed by Japan's financial problems," the Wall Street Journal remarked.

Meanwhile, government officials in Thailand announced December 8 that 56 out of 58 financial institutions that had been suspended in June and August will be shut down, with 5,000 - 10,000 jobs being cut. This action was one of the conditions demanded by the IMF's $17 billion "bailout" deal after the Thai regime devalued the baht on July 2. That currency's value has plummeted by more than 40 percent since then.

Another IMF demand included opening up the country to foreign investors. Bangkok Investment, one of the two remaining finance companies that were suspended, will sell an 80 percent stake to AIG Consumer Finance, an American International Assurance subsidiary Group.

With the IMF paving the way, foreign investors stepped up the pace to gobble up property in southeast Asia. Citicorp signed a bid to acquire control of First Bangkok City Bank in Thailand, while the Germany-based Westdeutsche Landesbank is bidding to purchase Finance One of Thailand.

Procter & Gamble recently acquired a controlling share of Ssangyong Paper Co., in what is considered to be the first large takeover of a south Korean firm by a foreign company.

Saying it will not succumb to IMF dictates like other regimes in the region, the government of Malaysia is projecting an IMF-style austerity program without the "bailout" package to halt the deterioration of its economy. Finance Minister Anwar Ibrahim announced December 5 that the regime would slash spending for social programs in 1998 by 18 percent.  
 
 
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